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CS Professional · Internal and Forensic Audit · Fraud Detecting Techniques

While testing journal entries at Ganga Foods Ltd using audit software, which of the following criteria would be the strongest fraud-risk filter for selecting entries for detailed review?

Round-sum manual entries posted late at night near year-end by a senior manager without narration are the strongest filter. These characteristics are classic indicators of management override of controls, whereas routine, automated or standard recurring entries carry far lower fraud risk.

  1. AEntries posted on weekdays during working hours by the accounts team
  2. BRecurring depreciation entries with standard narration
  3. CRound-sum manual entries posted late at night near the year-end by a senior manager with no narrationCorrect
  4. DEntries generated automatically by the billing module

Explanation

Round amounts, manual posting, unusual timing, senior-level access and missing narration are recognised journal-entry fraud indicators associated with management override. The other options describe routine or system-generated entries with low risk.

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